Forensic Accounting & Investigation

"I am sick and tired of being taken advantage of. I am too much of a nice person for this to happen to me. It is time I put my foot down and I don't give a hell about what anybody thinks about my action. Enough is enough!"

This is exactly what I am hearing from prospects who have contacted me. If this sentence describes your frustration, then this article can help you solve the problem. Otherwise, don't read it.

Every business is vulnerable to fraud. Fraud has cost some businesses and individuals up to 20% of their annual gross income. 30% of business failures are caused by fraud.

How much money are you losing? How much money do you want to recover? Do you know who the culprits are? Can you afford to wait longer without finding out? Would you like to correct the problem and stop your business from becoming tomorrow's case study of failed businesses?

My colleagues and I can help you find out and find the solution.

Act now. Call today for 30 minutes of FREE consultation. Thanks for your time. I look forward to hearing from you.

Sincerely,
Clemson (Clem) Barry, CFE, PCI

Forensic Accounting is the use of accounting for legal purposes. Most forensic accountants possess the designation CFE, conferred by the Association of Certified Fraud Examiners or the designation CrFA, conferred by the American College of Forensic Examiners. A forensic accountant is an independent, impartial, third-party professional hired by a plaintiff or a defendant to strengthen his or her case. Forensic accountants prepare reports for use by attorneys involved with civil and criminal litigation and they are available to testify in court. Forensic accountants use a combination of accounting, taxation and risk management skills, knowledge of the legal system, and intelligence-gathering techniques to ferret out fraud and deception in financial statements and business operations.

I have had numerous cases where bookkeepers and accountants were used as scapegoats to protect the real culprit(s). Sometimes their employers used public relations ploys (smokescreens) to divert attention from the real culprit(s) and make them the sacrificial lambs. Bookkeepers, accountants, or the attorneys representing them in alleged embezzlement schemes (accounting scandals) hire forensic accountants to construct personal financial profiles of their clients and use the report to exonerate their clients or use it during discovery, stipulation, as part of a brief, or as an exhibit in court.

Forensic accountants are frequently contacted and hired by taxpayers involved in alleged tax invasion cases. They are seeking recommendation on how they should proceed and the laws governing the issues raised in the case. Some people hire forensic accountants when they have strong suspicion that a trusted representative is fleecing their investment account(s); when their business is hemorrhaging money and they are uncertain who is siphoning the money out of the business; to evaluate a franchisor's offering circular and franchise agreement; or to evaluate equitable distribution in business and marital dissolution when a spouse or business partner feels cheated out of his/her fair share.

Forensic accountants add credibility to financial investigations. They are hired by corporations to boost shareholder confidence when a whistle blower informs management about employee embezzlement, skimming, theft of merchandise, ghost vendors, inflated invoices by contractors, employees acting in collusion with vendors and customers, diversion of merchandise by the purchasing and receiving departments, and waste and abuses or when the internal auditors discovered inaccuracies and irregularities (anomalies) in the company's books, records, and source documents, and unexplained changes in the financial statement that represent fraud symptoms that must be investigated (earnings manipulation). A forensic accountant would conduct an in-depth interview with the client to ascertain whether the client's allegations have merit, develop a profile of the suspect, determine the scope of the investigation, the number and frequency of progress reports the client desires, the feasibility of conducting a proper investigation, examine the client's written policies pertaining to hiring, crisis management, indemnity policies with insurers, and security & loss prevention; analyze the accounting records beyond traditional auditing to obtain direct evidence (smoking gun); evaluate the internal controls, trace missing (illicit) funds, and meet with counsel and private investigator(s) to discuss the merit of the case including hidden liability issues, pre-interview planning and attorney work product doctrine. If the client does not have a case, the forensic accountant would counsel the client, have the client and everybody connected to the investigation signed off on the case, close the case file, give the client a written report, and bill the client for the balance of the fee.

If the client does have a case, a checklist for the case is developed by the team and the investigation is delegated to the private investigator to perform the due diligence (interviewing, surveillance, searching public records, interrogation, etc.) and manage influences that could impede the case and compromise professional integrity. The feedback obtained from the investigator is used to construct a personal financial profile or wildcard behavioral pattern of the suspect's lifestyle. The forensic accountant (investigator) prepares and reviews the final report, presents and discusses the contents of the findings with the client, offers to streamline operations procedures including reconfiguring the system of internal control, and bills the client for the balance of the fee. Evidence that are relevant and material to the case are preserved. They can be used during discovery, stipulation, pre-trial conference, used as part of a brief or motion filed in court, and can be presented as exhibits at trial if the client decides to seek restitution in court.